Your path: Saturday MBA Schedule > Rhetoric & Teaching Requirements > Contact Marylhurst > Directory > Fresh Minds Fresh Writers > Choosing a Lender
Tips: Choosing a Lender
Choosing a lender is an important decision. You are beginning a relationship with a loan provider that works with you for many years over the life of the loan.
It is important to recognize that different lending organizations offer different levels of service and benefits. By doing your homework now, you or your parents may be able to save money down the road – by choosing a lender that helps you borrow responsibly, receive interest rate savings during repayment and manage debt successfully.
Frequently Asked Questions
Q: What are borrower benefits?
A: Borrower benefits are repayment incentives that save you money on your loan. Lenders offer different types of loan benefits such as cash rebates and interest rate reductions. In addition, some lenders offer benefits such as making the first payment for the borrower upon graduation. Carefully review these benefits to make sure you get the maximum value benefits over the life of your loan.
Q: Can certain loan programs save you money?
A: Yes. Choosing the right lender can save you hundreds or even thousands of dollars once your loan enters repayment. Because lenders offer different borrower benefits, it is important to choose the lender that offers the best incentives for you.
Q: Do all lenders offer the same loans?
A: No. Student loan programs are regulated by government policies, but within these policies lending organizations have the flexibility to offer different benefits and services to borrowers. Some lenders offer only subsidized Stafford Loans, which are based on financial need. Other lenders offer a variety of loans that are not based on financial need, such as unsubsidized Federal Stafford Loans, PLUS Loans and private education loans designed to cover additional costs. In addition, many lenders offer Consolidation Loans, which allow borrowers in repayment to consolidate their loans into one and extend their repayment period.
Q: Should I use one lender for all of my student loans?
A: Yes. Using a single lender will make repayment easier for you. If you change lenders during school, you could end up making mutiple payments instead of just one. Also, if you stay with one lender, many schools will allow you to get multiple Stafford Loans without completing new paperwork each year.
Q: Will my lender sell my loans?
A: Some lenders sell their loans to lend the money to future borrowers. This can impact borrowers in repayment and affect their benefits. Some lenders do not sell their loans, so borrowers stay with the same entity they initially borrowed from.
Q: Are student loans different than other banking consumer loans and services?
A: Yes. The Federal Family Education Loan Program (FFELP) provides student loans that are regulated by the federal government; therefore, they are handled independently of other banking services.
Q: What is a servicer?
A: Servicers are organizations that maintain borrower loan account records such as payment, updates, deferment and forbearance. In addition, the servicer provides information about your loan status, balance and school enrollment. Some lenders service your loan while you are in school, then have an outside servicer take over the loan when you are in repayment.
Q: What else should I know before I choose a lender?
A: Take your time and make an informed decision. You should never borrow more money than is absolutely necessary to cover the cost of your education and expenses. The money you borrow today can affect your financial future, so it is important to choose a lender that will help you manage debt successfully so you can reach your financial goals later on.
Q: How does repaying my loan help me in the future?
A: By taking steps to understand your student loan, you develop habits now that protect your credit in the future. Maintain contact with your lender and update them if your in-school status changes or if you are unable to make your monthly payment. By repaying your loan, you keep your credit in good standing, and you also make loans available to others who wish to pursue an education.